fund file

If investors were asked to give a chunk of money directly to emerging market governments, most would refuse. But in the stampede towards low-cost, index linked investment in emerging markets, many will effectively end up doing just that, according to a report in Monday’s FTfm.

Arjun Divecha, chairman of GMO’s board and manager of three of its emerging markets funds, says GMO research shows that about 35 per cent of the constituents of the widely benchmarked MSCI emerging market index are companies that are owned or controlled governments and that these companies actually account for about 70 per cent of the earnings generated by that index. Read more

Just when things were getting better for investors in Tunisia they got worse again, according to a report in Monday’s FTfm.

Rather than spook investors, the 2011 Jasmine revolution had the perhaps unexpected effect of convincing investors that their investments would be safe from confiscation by the former ruling family. Read more

China is expected to double its assets under management by 2015, but before asset managers start anticipating a sales bonanza they should take note of some failings, notes Amin Rajan, chief executive of CREATE-Research, in a report in Monday’s FTfm.

The problem is not just the well publicised difficulties with breaking into the tightly controlled distribution market. The difficulty, says Rajan, lies with the investors themselves. Read more

The public debate about the ethics of investing in farmland is being ignored by serious investors who seem to have had no qualms about buying up large tracts of land in Africa, according to a report in Monday’s FTfm.

It could be that they were following the advice of Jeremy Grantham, co-founder of asset manager GMO , who recently recommended a 10 per cent strategic allocation to “things in the ground”. Or it could be that they simply thought it was cheap. Either way, 62 per cent of all large-scale land acquisitions since 2000 have occurred in Africa, according to the Land Matrix Partnership. Read more

But, as a report in Monday’s FTfm explains, asset managers might have to wait a little longer for the retail funds market to thaw. The wealthy may be flashing their cash, but the Russian landscape remains bleak for most international managers. Read more

At the end of 2010 Bangladesh started doing that thing that frontier market investors dread. A long stock market rally ended so sharply that it sparked protests by angry investors outside the Dhaka stock exchange. The stock market reversal itself followed days of violent protests by Bangladeshi garment workers demanding promised higher wages.

Any hopes that the change in fortunes would be short-lived were dashed and investors saw 2011 wipe out all the gains the stock market had made in the previous year. But things could be about to get better for investors in Bangladesh, according to a report in Monday’s FTfm. Read more

Could the internet be the answer to distribution woes in emerging markets? One fund manager in Brazil certainly believes it might the solution there, according to a report in Monday’s FTfm.

As in other emerging markets Brazil’s retail distribution channel is dominated by the country’s top banks, which have 75-80 per cent of the market. But Pedro Bastos, chief executive of HSBC Global Asset Management in Brazil points out that this stranglehold could easily weaken in the future. Read more

The fund management industry in China is a little dysfunctional, as we reported last week, but few claim they can see how to fix it. Which is why an item in Monday’s FTfm makes such interesting reading.

Robert Pozen, senior lecturer at the Harvard Business School, and Theresa Hamacher, president of the National Investment Company Service Association (NICSA), recently returned from the Beijing launch of their bookThe Fund Industry: How Your Money is Managed, which has been translated into Mandarin. Read more

A pause for breath or a change in direction? After weeks of outflows, EM bond and equity funds both had inflows in the week to Wednesday, according to the latest numbers from EPFR, the Boston-based fund monitor.

EM bond funds saw inflows equal to 0.25 per cent of assets under management, or $361m in EPFR’s sample universe, following three weeks of outflows. EM equity fund reversed direction after five weeks of outflows, with inflows at 0.15 per cent of AUM, or $919m. Read more

China has been on a supersize binge that has led to case of investment gigantism, according to Edward Chancellor, writing in Monday’s FTfm.

Chancellor, who is on the asset allocation team of investment manager GMO, thinks the last fiscal stimulus in 2009 led to huge amounts of capital being stupendously misallocated and wonders if the proposed new stimulus plan will lead to more of the same. Read more

Yield chasers beware. A recent study has found you should ignore accepted wisdom and stay away from high risk investments, including in emerging markets, if you want high returns. A report in Monday’s FTfm examines the new advice. Read more

The inevitable has come to pass. There is mounting evidence that fund investors are moving ‘beyond Brics’, as a report in Monday’s FTfm reveals.

Equity funds invested in Brazil, Russia, India and China suffered net outflows of $581.4m in the last six months against inflows of $12.5bn to all emerging market equity funds, according to EPFR Global, the fund data provider. Read more

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beyondbrics is now the beyondbrics forum, given over exclusively to our guest writers as a forum for debate on the events, opportunities and challenges of the emerging world. Meanwhile, the FT’s emerging markets team is working on a new EM service to be launched soon on FT.com. Watch this space..